London's famous economists

Introduction

This section was originally put together for the World Congress of the Econometric Society, which was held at University College London in August 2005. IFS was involved in the organisation of the event. The biographical information and the economists' walks were intended to help visitors find their way around and understand the historical context of economics at UCL and in London.

London and the early history of economics and statistics

Before the foundation of UCL in 1826, the benefits of a university education in England were available only to men and only to those who were members of the Church of England. UCL, the first university established in England after Oxford and Cambridge, was founded to provide academic opportunities to non-Anglicans and placed no restrictions on race, class or religion of its students. In 1878, it also became the first British university to admit women on equal terms to men.
Its academic programme was also innovative in its recognition of new disciplines, including many of the social sciences.

The Chair of Political Economy at UCL was created in 1827 in memory of David Ricardo, establishing the first Department of Economics in England. The modern department has an outstanding international reputation in key areas of current research including applied theory, microeconometrics, game theory, labour economics, development economics, macroeconomics, industrial economics and environmental economics.

London has been associated with many pioneers in economics and statistics. Many of these have associations with University College, as either students or teachers there. Below we summarise the place of London in the history of economics, statistics and related sciences until the mid twentieth century.

One of the earliest contributors was the London merchant and mercantilist, Thomas Mun (1571-1641) whose emphasis on the importance of the balance of trade in economic prosperity deeply influenced subsequent economic thought. William Petty (1623-1687) was an advocate of data collection and quantitative enquiry in economics and other issues of state whose own exercises in 'political arithmetic' included an attempt to estimate national income and can be seen as early examples of applied econometrics.
John Locke (1632-1704), best known for his contributions to epistemology and political philosophy, wrote also on economics and provided, for example, an early statement of the Quantity Theory of Money.

In 1776 probably the most influential book in the history of economics, The Wealth of Nations, was published in London. Its author, the Scotsman Adam Smith (1723-1790), spent most of the previous three years in London debating the book’s chapters with friends and refining it for publication. At times also in London was Smith’s greatest friend, fellow Scottish philosopher David Hume (1711-1776) who also wrote on economics, arguing, for example, against mercantilism and introducing specie-flow arguments into analysis of international trade.

The late eighteenth century saw London at the centre of intellectual advance in economics. Jeremy Bentham (1748-1832) introduced the notion of 'utility' and developed the utilitarian framework still underpinning much applied policy evaluation, besides writing occasionally on explicitly economic issues. Living most of his life in London, his ideas influenced the founders of UCL and, according to the terms of his will, his dressed skeleton can still be seen in a glass cabinet in the college’s cloisters. Reverend Thomas Robert Malthus (1766-1834) is believed to have worked on his controversial but influential ideas on population and economy while living in London.
Among his ideas was that of diminishing returns in production, an idea discovered at the same time by two other London-born thinkers, Edward West (1782-1828) and David Ricardo, and by another political economist who came eventually to settle in London, Colonel Robert Torrens (1780-1864).

Arguably the greatest economist of his time, David Ricardo (1772-1823) corresponded with both Malthus and Bentham. Born into a Jewish family in east London, he made his fortune in the City’s emerging financial quarters before working out his theories of political economy, developing, for instance, ideas of gains from trade and a theory of distribution of factor returns that remain influential. In his thorough application of comparative static ways of thinking to the analysis of economic equilibria, he has been said to have literally invented the technique of economics.

The Ricardian system dominated economic thought in the country for the next half century. The Chair of Political Economy founded in his name at UCL was occupied first by his follower John Ramsay McCulloch (1789-1864). Also working in London was his adherent Thomas de Quincey (1785-1859), now better known for literary memoirs recounting his time as an opium eater. Most influential among his followers however were the London father and son, James Mill (1773-1836) and John Stuart Mill (1806-1873) whose works expounded and developed both utilitarian ethics and classical economic theory. Living in London as a political exile, Karl Marx (1818-1883) was heavily though not uncritically influenced by Ricardo’s theories as he developed his own economic theory working in the Reading Room of the nearby British Museum. Nassau William Senior (1790-1864) was an influential critic of Malthus’ and Ricardo’s assumptions and made important contributions to the theory of international trade. Now better known for his place in the history of computing, Charles Babbage (1791-1871), a lifelong Londoner, also contributed around this time to the economic theory of production.

The most eminent figure to hold a professorship of economics at UCL was William Stanley Jevons (1835-1882), also earlier a student of the college. Often seen as the main British contributor to the marginalist revolution in economic thought of the 1870s, he challenged Ricardian ideas, seeking for instance to replace theories of value based on labour input with theories based on utility. In his support for the use of mathematical analysis in economics and in his practical use of economic statistics, he can be seen as one of the first exponents of recognisably modern econometric methods. His ideas were influential on later London economists, including Philip Wicksteed (1844-1927), Edwin Cannan (1861-1935) and Lionel Robbins (1898-1984). Among Jevons’ friends was Francis Ysidro Edgeworth (1845-1926), then a professor at King’s College London, whose own contributions included the idea of the indifference curve and important insights into economic equilibrium, whilst he also made contributions to the earliest developments in mathematical statistics.

In subsequent years economics in Britain was dominated by Alfred Marshall (1842-1924), who, though he later worked outside the city, was born and educated in London. His approach sought to reconcile classical and modern thought. Among his followers was Arthur Cecil Pigou (1877-1959) who began his career as a lecturer at King's College London and who made important contributions to analysis of taxation.

At the turn of the century, the London School of Economics and Political Science was founded and played a major role in economic thought in the following years through figures such as Cannan and Robbins, already mentioned above, and others such as Arthur Bowley (1869-1957), John Hicks (1904-1989), Abba Lerner (1903-1982), Roy Allen (1906-1983), Friedrich Hayek (1889-1992) and Bill Phillips (1914-1975) – of the Phillips-curve - who made various hydraulic models of the economy, one being on display in the Science Museum.

Perhaps the most influential and well known British economist of the twentieth century was John Maynard Keynes (1883-1946). Although academically attached to Cambridge, he associated with a group of aesthetes and scholars known as the Bloomsbury Group named after the Bloomsbury area of London (particularly, Gordon Square) where they met and where the World Congress takes place.

Several of the above figures, such as Petty, Edgeworth and Bowley, also contributed to the history of statistics. Here also London, and especially UCL, has played an outstanding role.

John Graunt (1620-1674), a friend and collaborator of Petty, studied London mortality statistics, projected population and created the first known life tables. Abraham de Moivre (1667-1754), tutoring in London as a Huguenot emigré, made several fundamental contributions to the theory of probability including definitions of concepts such as independence and the first use of the normal distribution (which he linked to the binomial distribution in a precursor of the central limit theorem), besides working on problems of annuities. Not known for his contributions to economic theory, though one of the greatest scientists ever, was the Warden/Master of the Mint (from 1696 until his death) Isaac Newton (1642-1727). Needless to say, his invention of differentiation was not just a milestone for physics, but proved to be indispensable for the development of (mathematical) economics too. It yielded numerous further tools, for instance Taylor’s theorem, a creation of Brook Taylor (1685-1731).

Reverend Thomas Bayes (1702-1761), best known for the theorem bearing his name, ministered and is buried in London. His work was published after his death by Richard Price (1723-1791), another dissenting cleric who made contributions of his own to the theory of probability and to many other areas, including actuarial science, social insurance and government finance. Thomas Simpson (1710-1761), mathematician, also made important contributions to probability and annuities.

Through the nineteenth century, enquiry into public health led to developments in statistical practice. William Farr (1807-1883), an associate of McCulloch, modelled spread of epidemics. His collaboration with John Snow (1813-1858), a London medic, identifying the source of the 1854 cholera outbreak in Broad St to an infected water supply, was a landmark in epidemiology. Farr worked closely with Florence Nightingale (1820-1910), nurse and national heroine, who made important advances in collection of medical statistics. William Guy (1810-1885), professor at King's College London, also contributed to the development of medical statistics. In the late nineteenth century Charles Booth (1840-1916) initiated and oversaw an innovative fifteen year social survey of poverty in London.

In the same era the two early pioneers of matrix algebra were the friends Arthur Cayley (1821-1895) and James Joseph Sylvester (1814-1897). Ineligible, because Jewish, for university employment elsewhere in Britain, the latter was professor of Natural Philosophy at UCL from 1838 until 1840. Returning after a time in the US and now practising law, he met Cayley, who was trained as a mathematician too. Later both returned to chairs in mathematics.

The notions of correlation and regression were introduced in the work of the eugenicist, Francis Galton (1822-1911). The Chair in Eugenics founded at UCL by Galton was first held by Karl Pearson (1857-1936) who founded the college’s Department of Applied Statistics. He continued to explore the ideas of regression and correlation with, for example, George Udny Yule (1871-1951) also then at UCL. Among Pearson’s other contributions were both the introduction of the chi-squared test and the method of moments. Also briefly in the department at this time was William Gosset (1876-1937), discoverer of the t test for a sample mean. Pearson’s son, Egon Pearson (1895-1980), followed him into a post at UCL where he met Jerzy Neyman (1894-1981) with whom he developed the theory of hypothesis testing. Pearson’s successor at UCL was Ronald Aylmer Fisher (1890-1962) whose many contributions include the application of t and F tests to regression coefficients and proposing the method of maximum likelihood estimation. Meanwhile factor analysis was being developed by Charles Spearman (1863-1945), a professor of psychology at UCL. Other UCL statisticians of the early twentieth century included John Wishart (1898-1956), later of Imperial College, and Maurice Kendall (1907-1983), later at LSE, and Maurice Bartlett (1910-2002), who succeeded Egon Pearson, but held other positions afterwards.